The House Budget Committee on Wednesday agreed to bake in hundreds of billions in Medicaid cuts from its ACA repeal bill to the budget resolution, plus an additional $114 billion in cuts over 10 years.
The committee’s Republicans’ unanimously approved the decision with no Democrats on board. The budget resolution, which is the foundation for passing tax reform in the Senate without Democratic votes, also assumes Medicare will reduce spending by $487 million from 2018 to 2027.
Some of the additional savings would come from imposing a work requirement on Medicaid adult beneficiaries who are younger than 65 and are not on Social Security disability as a condition of eligibility.
The Medicare savings are built on an idea long-favored by Republicans — using vouchers to buy insurance, though Republicans say future beneficiaries will have the option to buy traditional Medicare too. Democrats during Wednesday’s hearing complained that traditional Medicare would cost 25% more than it does now if vouchers come into play.
The Republicans also included savings that would stem from raising the Medicare eligibility age for future beneficiaries who are 51 or younger. Under the proposal, those individuals would not become eligible for full Social Security benefits or Medicare until the age of 67. The Congressional Budget Office has estimated that would reduce Medicare spending by 2% once everyone in the program is covered by the later eligibility age.
The proposal includes a requirement that affluent seniors pay higher premiums, and that people with incomes of $1 million or more pay the full cost of Medicare premiums without any federal subsidy.
Rep. Matt Gaetz, R-Fla., said during the hearing that the proposed changes are based on math rather than Tea Party politics, as some have alleged.
The Republican spending outline also assumes the government will do better at recouping or avoiding improper payments. The proposal said that there was $59.7 billion in improper Medicare payments in in the last fiscal year, and $36.3 billion in improper Medicaid payments. The outline assumes future improper payments will be 50% lower than today’s levels.
Rep. Debbie Wasserman-Schultz, D-Fla., introduced an amendment that would have changed the resolution so that it no longer assumed American Health Care Act changes would be future law, citing the Senate bill’s collapse this week.
But every Republican present on the committee voted against the amendment. “This is the official position of the House on repeal and reform efforts,” said Rep. Bill Johnson, R-Ohio.
The budget resolution also includes a reduction in health spending of $43.9 billion over 10 years, the CBO estimate of how much the malpractice reform bill that passed the House would save.
Ranking Member John Yarmuth, D-Ky., called the budget disgraceful and others called the cuts to Medicare, Medicaid and food stamps draconian, several Republicans worried what it envisions might not come to pass.
“We might fail to achieve savings in mandatory spending,” which includes Medicaid and Medicare, Johnson said, noting that the budget resolution might make it harder to pass tax reform in the Senate.
The first hurdle, however, is for the resolution to pass the entire House of Representatives.
All eyes yesterday were focused on the Senate, which released significant new amendments to the Better Care Reconciliation Act. But the Senate was not the only game in town.
On July 13 the Medicare Trustees released their 2017 Medicare Trust Fund report. One of the most controversial creations of the ACA was the Independent Payment Advisory Board (IPAB). The ACA established specific target growth rates for Medicare and charged the IPAB with ensuring that Medicare expenditures stayed within these limits.
Each year the CMS Chief Actuary must make a determination as to whether the projected average Medicare growth rate for the 5-year period ending 2 years later will exceed the target growth rate. For each year since the provision went into effect in 2013, the CMS Chief Actuary has determined that the projected growth rates will not exceed these limits. It was thought that this year might be different, but for 2017 the Chief Actuary again concluded that the growth rate will not be exceeded, and said so in a letter to CMS.
The IPAB was supposed to be a 15-member board of experts that would, for years when Medicare growth rates were projected to exceed the threshold, make recommendations for cutting costs. These would be implemented unless Congress enacted an alternate approach that would achieve the same savings or waived the requirement to cut costs by a three-fifths majority. The IPAB has never been created, but under the ACA, in the absence of an IPAB its power to make program cuts devolves to the HHS Secretary.
The IPAB is deeply disliked in Congress and proposals to abolish it have wide support. But the IPAB statute seems to say that the IPAB can only be abolished by a joint resolution of Congress which must be introduced into Congress by February 1, 2017 and be enacted, following very specific procedures, by August 15, 2017. In fact, one bill to abolish the IPAB was introduced into the Senate by February 1 with 36 Republican co-sponsors, and another with 12 Democratic co-sponsors, while a House bill was introduced on February 3 with 233 Democratic and Republican cosponsors. But August 15 is coming up quickly and Congress seems to have its hands full with other issues. Moreover, the CBO would likely view elimination of the IPAB as coming with a high price tag.
It may not matter much. The IPAB provision recognizes that Congress can always change its mind. It could presumably change its rules to allow it to abolish the IPAB whenever it chose to do so. In fact, the rules that the House adopted for the 115th session provide that any IPAB submittals are not to be considered during the 2017-2018 session. But if Congress chose to proceed according to the ACA’s provisions, the IPAB would find few defenders.
Federal Exchange Eligibility Redeterminations And Re-Enrollment
CMS released on July 13 a guidance describing how it intends to handle eligibility redeterminations and re-enrollment for federal exchange enrollees for 2018. Basically, CMS intends to use the same procedures it used for redeterminations and reenrollment for 2017, which in turn were similar to those used for 2016. The exchange will continue to auto-reenroll enrollees who fail to select a plan, and to terminate enrollees who have been auto-reenrolled more than once without contact with the exchange.
There is one change for 2018: CMS will discontinue advance premium tax credits (APTC) and cost-sharing reduction (CSR) payments not just for enrollees who received APTC or CSRs and did not file a tax return in a prior year in which they received ATPC or CSRs, as CMS did in 2016, but additionally for enrollees who failed to file form 8962 to reconcile the APTC they received and the premium tax credits to which they were entitled, and failed to contact the exchange and obtain an updated eligibility determination for 2018. Filing a tax return and reconciling APTC with premium tax credits is an eligibility requirement for receiving APTC and CSRs in subsequent years, but federal regulations prohibit termination of coverage for this reason unless direct notice is sent to the enrollee that coverage will be terminated for failure to file. Until now, CMS has not been able to provide the required notice for those who fail to reconcile.
Finally, on July 13, 2017, the Government Accountability Office released a report on Improvements Needed in CMS and IRS Controls over Health Insurance Premium Tax Credits. The report is long and detailed and reviews comprehensively the controls that CMS and the IRS have in place—or, more often, do not have in place—for ensuring that improper premium tax credits are not made.
The GAO scored both agencies for failing to provide accurate assessments of improper payments. It also criticized each agency for failing to have procedures in place for verifying most eligibility requirements for premium tax credits and for identifying and correcting errors in premium tax credit reporting and collecting overpayments. The agencies responded that they are working on improving verification and processing procedures, but that that they have limited resources and verification is not always possible.
In the end, a tax-based system for paying for health insurance that depends on accurate reporting and verification of citizenship or lawful alien status, incarceration status, income, residence, health insurance premiums, household composition, availability of alternative forms of coverage, and tax filing status of applicants and enrollees—and requires coordination of two independent federal agencies—is very difficult to administer. If the Senate’s BCRA is adopted, administration of the program will only become more complicated, as all of these factors remain relevant and to them will be added age and the possibility of new forms of coverage that do not qualify for premium tax credits, but can be paid for using tax-subsidized health savings accounts. The GAO has its future work cut out for it in any event.
The outreach was prompted by a Justice Department announcement in June that Genesis Healthcare would pay the federal government more than $53.6M.
The nonprofit Corporate Whistleblower Center is urging a medical doctor in any state to call them if they possess proof a healthcare company is substantially overbilling Medicare for hospice services for people who are not dying. The organization is also interested in hearing about skilled nursing or nursing homes facilities that are billing Medicare as if they are fully staffed when in fact they’re not.
The outreach was prompted by a Justice Department announcement in June that Genesis Healthcare would pay the federal government more than $53.6 million to settle lawsuits and investigations alleging that companies it acquired violated the False Claims Act — submitting false claims to government healthcare programs for medically unnecessary therapy and hospice services, and grossly substandard nursing care.
Allegedly the companies were also billing for hospice services for patients who weren’t terminally ill and were thus ineligible for the Medicare hospice benefit. The companies also allegedly billed inappropriately for certain physician evaluation management services.
Additionally, the settlement resolves allegations that Genesis and its affiliates violated certain essential requirements that nursing homes have to meet to participate in and receive reimbursements from government healthcare programs, and failed to provide sufficient nurse staffing to meet residents’ needs. The whistleblowers will receive a combined $9.67 million as their share of the recovery in this case.
The Corporate Whistleblower Center suspects that similar scenarios have the potential to occur in every state, whether it be a hospital admitting Medicare patients who should not have been admitted, a nursing home billing Medicare as if their Medicare patients are receiving the proper care when they’re not, or a hospice company signing up patients who are not dying.
The group advised potential whistleblowers not to approach the government first, or the news media. It offers help finding law firms to handle the information.
Potential whistleblowers can contact the Corporate Whistleblower Center at 866-714-6466 or at corporatewhistleblower.com.
An important question in the debate over proposals to repeal and replace the Affordable Care Act (ACA) is what might happen to the law’s many provisions affecting the Medicare program. The American Health Care Act (AHCA), which was passed by the House of Representative on May 4, 2017, and the Better Care Reconciliation Act (BCRA), released by Senate Republicans on June 22, 2017, would leave most ACA changes to Medicare intact, including the benefit improvements (no-cost preventive services and closing the Part D coverage gap), reductions to payments to health care providers and Medicare Advantage plans, the Independent Payment Advisory Board, and the Center for Medicare and Medicaid Innovation.
However, both bills would repeal the Medicare payroll surtax on high-income earners that was added by the ACA, effective January 2023. That provision, which took effect in 2013, provides additional revenue for the Part A trust fund, which pays for hospital, skilled nursing facility, home health and hospice benefits. The Part A trust fund is financed primarily through a 2.9 percent tax on earnings paid by employers and employees (1.45 percent each). The ACA increased the payroll tax for a minority of taxpayers with relatively high incomes—those earning more than $200,000/individual and $250,000/couple—by 0.9 percentage points.
In addition to repealing the ACA’s Medicare payroll surtax, both bills would repeal virtually all other tax and revenue provisions in the ACA, including the annual fee paid by branded prescription drug manufacturers, which would decrease revenue to the Part B trust fund. The bills would also reinstate the tax deduction for employers who receive Part D Retiree Drug Subsidy (RDS) payments, which would increase Medicare Part D spending.
According to the Congressional Budget Office, the provision in the AHCA and the BCRA to repeal the Medicare payroll surtax would reduce revenue for Part A benefits by $58.6 billion between 2017 and 2026. Proposed changes to the ACA’s marketplace coverage provisions and to Medicaid financing in both bills would also increase the number of uninsured, putting additional strain on the nation’s hospitals to provide uncompensated care. As a result, Medicare’s “disproportionate share hospital” (DSH) payments would increase, leading to higher Part A spending between 2018 and 2026 of more than $40 billion, according to CBO.
Altogether, changes to Part A spending and financing in the AHCA and BCRA would weaken Medicare’s financial status by depleting the Part A trust fund two years earlier than under current law, moving up the projected insolvency date from 2028 to 2026, according to Medicare’s actuaries(Figure 1).
After much secrecy and no public deliberation, Senate Republicans finalized release their “draft” repeal and replace bill for the Affordable Care Act on June 22. Unquestionably, the released “draft” will not be the final version.
Amendments and a potential, albeit not necessary, conference committee are likely to make some adjustments. However, both the House version – American Health Care Act (AHCA) – and the Senate’s Better Care Reconciliation Act (BCRA) will significantly reduce coverage for millions of Americans and reshape insurance for virtually everyone. The Congressional Budget Office (CBO) is expected to provide final numbers early the week of June 26.
If successful, the repeal and replacement of the Affordable Care Act would be in rare company. Even though the U.S. has been slower than any other Western country to develop a safety net, the U.S. has rarely taken back benefits once they have been bestowed on its citizenry. Indeed, only a small number of significant cases come to mind.
My academic work has analyzed the evolution of the American health care system including those rare instances. I believe historical precedents can provide insights for the current debate.
Providing help to mothers and infants
The first major federal grant program for health purposes was also the first one to quickly be eliminated. The program was authorized under the Sheppard-Towner Maternity and Infancy Protection Act of 1921. It provided the equivalent of US$20 million a year in today’s dollars to states in order to pay for the needs of women and young children.
Sheppard-Towner, which provided funding to improve health care services for mothers and infants, was enacted after a long debate in Congress amid accusations of socialism and promiscuity. Interestingly enough, the act may have passed only due to pressure from newly voting-eligible women.
Jeanette Rankin, the original sponsor of the Shepard-Towner Act and the first woman elected to Congress, pictured in 1970.John Duricka/AP
Overall, the program was responsible for more than 3 million home visits, close to 200,000 child health conferences and more than 22 million pieces of health education literature distributed. It also helped to establish 3,000 permanent health clinics serving 700,000 expectant mothers and more than 4 million babies.
The program continued until 1929, when Congress, under pressure from the American Medical Association, the Catholic Church and the Daughters of the American Revolution, terminated the program. Without federal support, a majority of states either eliminated the programs or only provided nominal funding. Fortunately for America’s children and mothers, the Social Security Amendment of 1935 reestablished much of the original funding and expanded it over time.
Helping America’s farmers during the New Deal
America’s next major program confronted a similar fate. To address the challenges of rural America during the Great Depression, the federal government developed a variety of insurance and health care programs that offered extensive and comprehensive services to millions of farm workers, migrants and farmers.
Grandmother and sick baby of a migratory family in Arizona. These types of families were targeted for help by the Farm Security Administration.NARA/ Dorothea Lange
Some of these programs provided subsidies to farmers to form more than 1,200 insurance cooperatives nationwide. At times, the federal government’s Farm Security Administaton (FSA) provided extensive services directly to migrant farm workers through medical assistance on agricultural trains, mobile and roving clinics, migratory labor camps that included health centers staffed with qualified providers, full-service hospitals and Agricultural Workers Health Associations (AWHA).
In all cases, services were generally comprehensive and included ordinary medical care, emergency surgery and hospitalization, maternal and infant care, prescription drugs and dental care.
Although these services were accepted during wartime, the American Medical Association and the Farm Bureau opposed them, which ultimately led to their demise shortly after World War II. Millions of farmers lost their insurance.
Medicaid in the 1980s
Perhaps the most indicative expectations on what will happen in case congressional Republicans are able to pass their proposal hails from the Medicaid program itself.
In the early 1980s, Medicaid underwent a series of cuts and reductions leading to the first contracting in the program’s history. These involved both a reduction in federal funding and in eligibility, and an increase in state flexibility to run the program, as do the Republican proposals in Congress.
The 1980s also saw the creation and quick demise of another health care program. The Medicare Catastrophic Coverage Act of 1988 sought to fill in the gaps of the original Medicare program for America’s seniors. Specifically, it sought to provide them with protection from major medical costs and offer them a prescription drug benefit for the first time.
Similarly to the Affordable Care Act, the law had a redistributive foundation by requiring richer seniors to contribute more than poorer individuals. Also, similarly to the Affordable Care Act, it phased in benefits over a period of time.
Congress, confronted by affluent seniors who would have shouldered much of the financial burden of the program, quickly repealed much of the law before its provisions came into effect.
A Republican President, George W. Bush, was responsible for extending prescription drug benefits to seniors under Medicare Part D.Jason Reed/Reuters
It took more than a decade to provide America’s seniors with a prescription drug benefit through Medicare Part D, while only limited steps have been taken to protect seniors from major medical losses.
The consequences of those rare cases are nonetheless instructive. States were unable to continue the program without federal support or offer a valid replacement. Indeed, the programs quickly faded away. With them, millions of Americans lost access to health care.
In all three previous cases, the federal government eventually renewed its financial support. However, at times it took time for a replacement program to emerge.
The current changes proposed by congressional Republicans, particularly to the Medicaid program, are tremendously more consequential than anything we have previously experienced.
Indeed, in scale and extent, the proposed changes are unprecedented and would significantly roll back, likely for the foreseeable future, America’s safety net.
Cleveland Clinic, Kaiser, NewYork-Presbyterian executives are all concerned over the Senate’s bill.
Healthcare CEOs made the rounds of news shows in this week to air their grievances with the Better Care Reconciliation Act, the Senate GOP bill intended to replace Obamacare.
But, it’s healthcare CEOs who are working to mitigate the anticipated changes who are anticipating how the proposed legislation would affect their organizations.
Among healthcare chief executives weighing in on the topic in recent days are Cleveland Clinic CEO Toby Cosgrove, MD, New York Presbyterian CEO Steven J. Corwin, MD, and Kaiser Permanente CEO Bernard Tyson.
Cleveland Clinic CEO Toby Cosgrove
With the anticipated greater numbers of uninsured patients coming into hospitals, “you’re going to have hospitals that are in very deep financial trouble,” Cosgrove told CNBC’s “Squawk Box” on Wednesday. “And this is particularly true of rural hospitals and safety net hospitals, which are very dependent on Medicare and Medicaid for their returns.”
As he sees it, legislators are not looking at the “root cause of the problem.” It’s not how you divide the money,” he said. “The problem really is the rising cost of healthcare.”
“I think if we came together and dealt with the root cause there’d be plenty of money to go around to look after people,” Cosgrove said. “But if we don’t deal with it now, we’re going to have the same problem going 10 years from now.”
“We’re really headed in the wrong direction,” Cosgrove said. We’re talking about payment reform; we’re not talking healthcare reform.”
Kaiser Permanente CEO Bernard J. Tyson
Bernard J. Tyson, chairman and CEO of Oakland, Calif.-based Kaiser Permanente, wrote in a LinkedIn post that although the ACA – also known as Obamacare – is an imperfect legislation, future healthcare reform must build on its progress, rather than undo it.
“We need to pause and ask policymakers to answer the most fundamental question: What does progress on healthcare look like for the people in America?”
In his view, it should cover more people, not fewer people; be affordable.
Without question, we must make healthcare more affordable; provide the best quality of care and best health outcomes.
Tyson points out that the U.S. has among the poorest health outcomes compared to the other developed nations. The healthcare industry can improve quality if “we commit to moving from a predominantly ‘sick care,’ episodic, fee-for-service model to a predominantly preventive model with incentives for value, integrated care and, most important, keeping people healthy.”
“The draft bill does not expand coverage; it does not do enough to protect people in need of care, nor does it provide enough assistance to those who need help in paying for health care and coverage,” he writes.
NewYork-Presbyterian CEO Steven J. Corwin
Speaking to Bloomberg on Tuesday, Steven J. Corwin, CEO of NewYork-Presbyterian said, “Just remember this: One in three children in this country is insured by Medicaid. One in three.”
Corbin noted that two-thirds of the expense of Medicaid are for people who are in nursing homes.
“So, you can work all your life, be a grandma, or ma, and then go through your assets, and then you have to be on Medicaid to go into a nursing home,” he said. “This is going to be devastating to so many people.”
Asked whether he would prefer having something concrete done in Congress or just see the proposed bill go away, Corbin said: “I’d like to see it go away. And, I’d like to see the Medicaid expansion remain, and I’d like to see the insurance market stabilized.”
Gail Wilensky, Ph.D., Senior Fellow, Project HOPE; Former Administrator Under President George H.W. Bush, Health Care Financing Administration Andy Slavitt, Senior Advisor, Bipartisan Policy Center; Former Acting Administrator President Barack Obama, Centers for Medicare and Medicaid Services Mark Zitter, Chair, the Zetema Project—Moderator
Where is health care in the U.S. headed under the Trump administration? What do recent changes mean, and how will they affect consumers? Where should we be heading and why?
Now that the American Health Care Act (AHCA) has passed in the House, health care reform remains a hotter topic than ever. House Speaker Paul Ryan (R-WI) has proposed turning Medicare into a voucher program and funding Medicaid through block grants to states. Congress continues to discuss eliminating the individual mandate and providing more flexibility in terms of which benefits insurers must offer. Conservatives claim these changes would provide greater choice to consumers and more value to the federal budget, while progressives argue that these changes would reduce access to care and worsen health outcomes.
We’ll hear from two former senior officials on the ongoing efforts to repeal or repair the Affordable Care Act (ACA). Andy Slavitt recently stepped down as acting administrator for the Center for Medicare and Medicaid Services under President Barack Obama. Gail Wilensky held the same post under President George H.W. Bush. Both experts continue to speak out from differing perspectives on Medicare and Medicaid as well as broader reform issues. Join us for a spirited discussion on the problems and prospects of U.S. health care.
Location: 555 Post St., San Francisco Time: 5:30 p.m. check-in, 6:30 p.m. program
Notes: In association with the Zetema Project
Medicare Advantage plans have played an increasingly larger role in the Medicare program as the share of Medicare beneficiaries enrolled in Medicare Advantage has steadily climbed over the past decade. The trend in enrollment growth is continuing in 2017, and has occurred despite reductions in payments to plans enacted by the Affordable Care Act of 2010 (ACA). This Data Spotlight reviews national and state-level Medicare Advantage enrollment trends as of March 2017 and examines variations in enrollment by plan type and firm. It analyzes the most recent data on premiums, out-of-pocket limits, and quality ratings. Key findings include:
Enrollment Growth. Since the ACA was passed in 2010, Medicare Advantage enrollment has grown 71 percent. As of 2017, one in three people with Medicare (33% or 19.0 million beneficiaries) is enrolled in a Medicare Advantage plan (Figure 1).
Market Concentration. UnitedHealthcare and Humana together account for 41 percent of enrollment in 2017; enrollment continues to be highly concentrated among a handful of firms, both nationally and in local markets. In 17 states, one company has more than half of all Medicare Advantage enrollment – an indicator that these markets may not be very competitive.
Medicare Advantage Penetration. At least 40 percent of Medicare beneficiaries are enrolled in Medicare private plans in six states: CA, FL, HI, MN, OR, and PA. In contrast, fewer than 20 percent of Medicare beneficiaries are enrolled in Medicare Advantage plans in 13 states, plus the District of Columbia.
Premiums and Cost-Sharing. While average Medicare Advantage premiums paid by MA-PD enrollees have been relatively stable for the past several years ($36 per month in 2017), enrollees may be liable for more of Medicare’s costs, with average out-of-pocket limits increasing 21 percent and average Part D drug deductibles increasing more than 9-fold since 2011; however, there was little change in out-of-pocket limits and Part D drug deductibles from 2016 to 2017.
Medicare Advantage enrollment is projected to continue to grow over the next decade, rising to 41 percent of all Medicare beneficiaries by 2027.1 As private plans take on an even larger presence in the Medicare program, it will be important to understand the implications for beneficiaries covered under Medicare Advantage plans and traditional Medicare, as well as for plans, health care providers and program spending.
HENRY KOTULA 
